Greta Steels Ltd Vs Commissioner of Customs (CESTAT Chennai)
Conclusion: Penalty under sec. 112 was justified where the Pre-Shipment Inspection Certificate (PSIC) was not issued by a DGFT-approved agency for Mauritius and was found to be forged as even if the goods were found to be clean upon inspection, the submission of a forged certificate still violated the legal procedure intended to safeguard against the import of hazardous materials.
Held: Assessee-company was acting as a high-seas seller, imported Light Melting Scrap (LMS) from Mauritius and sold the goods to an Indian buyer. For clearance, a PSIC was submitted, which was issued by Worldwide Inspection Services Pvt. Ltd., New Delhi. The Customs authorities questioned the validity of the certificate, as the agency was not approved by the Directorate General of Foreign Trade (DGFT) for inspections conducted in Mauritius. Based on discrepancies in the documentation and the agency’s lack of approval, the Customs Department imposed a penalty of Rs. 1,65,000 on assessee under Section 112(a) of the Customs Act. Commissioner of Customs (Appeals) upheld the penalty. Aggrieved by the decision, assessee approached the CESTAT. It argued that since no DGFT-approved agency existed in Mauritius at the relevant time, they relied in good faith on a branch office of an approved inspection agency. He submitted that the goods were later subjected to 100% physical inspection in India, and no arms, ammunition, or prohibited materials were found. Even if the PSIC was technically flawed, the import did not involve any banned goods and the lapse was procedural, not intentional. Department argued that the inspection certificates appeared forged and misleading. It was pointed out that the inspection timings shown were not physically possible, and the certificates were issued by an inspector whose link to the issuing agency was unclear. They argued that producing a forged document before Customs constituted a serious violation, regardless of the final physical inspection result. It was held that an unauthorized agency issued the PSIC and the certificates included inconsistencies that would not be acceptable to a reasonable person. Tribunal also observed that even if the goods were found to be clean upon inspection, the submission of a forged certificate still violated the legal procedure intended to safeguard against the import of hazardous materials. Tribunal explained that the requirement for PSIC was rooted in public safety concerns, and submitting an invalid or forged certificate could not be treated as a minor or technical lapse. Tribunal further held that the definition of “person” under the Customs Act includes companies and therefore, assessee could be held liable under Section 112(a). Considering that no dangerous goods were found in the cargo, the tribunal reduced the penalty from Rs. 1,65,000 to Rs. 1,00,000.
